-loss resulting directly or indirectly from any theft, disappearance, damage, destruction or disclosure of any intangible property or confidential information.

-loss resulting directly or indirectly from diminution in value of money, securities or other property.

“All of the above exclusions address the policy's inability to respond to indirect losses, loss of intangible items, or for loss of value associated with the alleged Employee Theft. The insured has not suffered a loss as the result of an employee “taking” money or other tangible covered property. We understand that as a self-insured company the insured suffered a monetary loss associated with the payment of medical claims, but those losses do not fit within the parameters of coverage.”

We disagree with the declination by the insured as we believe the policy should respond since the insured did incur a direct financial loss as a result of employee dishonesty. Can you please comment.

New Jersey Subscriber

Everything in this situation hinges on policy definitions. While the employees were dishonest, the policy covers employee theft or forgery, not dishonesty. The policy defines forgery as the signing of the name of another person affixed directly to covered instruments; they did not forge a document with another person's signature, they altered the time card to reflect a different employee status. It's still dishonest, but not forgery by definition. Then the policy defines theft as the unlawful taking of money, securities or other property to the deprivation of the insured. Money, securities and other property are all defined terms in the policy, and do not correspond to the payment of medical benefits which is what the employee received. Yes the employee received monetary benefit by way of medical treatment, but medical treatment is not a tangible property. While gauze and sutures are used in an operation the skill of the physician and operating staff are large parts of the service provided.

The policy also excludes loss resulting directly or indirectly from any other fraudulent, dishonest or criminal act committed by an employee unless covered under insuring agreement A1.; since we have established that there is no coverage under A1 for this loss, there is no coverage elsewhere in the policy.